Newspaper article THE JOURNAL RECORD

..New Jersey Bank Ties New Certificate of Deposit to Rising Costs of a College Education

Newspaper article THE JOURNAL RECORD

..New Jersey Bank Ties New Certificate of Deposit to Rising Costs of a College Education

Article excerpt

Probably one of the biggest expenses faced by young families today is saving for college tuition. How do you even begin to accumulate the kind of wealth needed for a college education 10 or 15 years down the road? I'd like to take a look at a new financial product geared specifically for this goal.

The College Savings Bank of Princeton, N.J., plans to offer a certificate of deposit called CollegeSure. What makes this CD different from the others? Described by one press report as every parent's fantasy, its return is tied to the rising costs of a college education.

I suppose that in this age of specialization, something like this had to happen. The premise is an excellent one - when have you known college costs to fall? Let's take a look at CollegeSure.

Here's how it works. CollegeSure's return equals the annual changes in college tuition, fees, and room and board. As a measuring stick, it uses the College 500 Index (watch out, Standard and Poor's - college costs have risen twice as fast as inflation over the past 10 years!). The index is prepared once a year by a non-profit institution called the College Board and reflects the costs at 500 private colleges across America. The board has no affiliation with College Savings Bank.

CollegeSure had an interesting beginning. As reported in American Banker, Peter Roberts, head of the bank, was discussing college education costs with his brother and sister-in-law over dinner about four years ago. They wanted to prepay their kids' college education, but couldn't find a form of investment that kept pace with the rising costs. That's what gave Peter the idea to form the thrift and to create CollegeSure.

The Federal Deposit Insurance Corp. will guarantee principal and interest in each College Savings Bank account up to $100,000. The CDs mature anywhere from 1 year to 25 years. You can buy the CD in units or fractions of units, with a unit equaling the average cost of one year's undergraduate education. …

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